Gov. Chritie Leaning on Tax Subsidies

Panasonic received $102.4 million in tax credits to move its headquarters nine miles within New Jersey. Goya Foods picked up $81.9 million in credits to build offices and a warehouse in Jersey City, two miles from its current complex. Prudential Insurance obtained $250.8 million to move a few blocks to a new tower in Newark.

Prudential Insurance, now in the Gateway complex in Newark, will receive $250.8 million in tax breaks to move a few blocks.

Since taking office in 2010, Gov. Chris Christie has approved a record $1.57 billion in state tax breaks for dozens of New Jersey’s largest companies after they pledged to add jobs. Mr. Christie has emphasized that these are prudent measures intended to help heal the state’s economy, which lost more than 260,000 jobs in the recession. The companies often received the tax breaks after they threatened to move to New York or elsewhere.

The generous distribution of subsidies in New Jersey has come under fire from government-reform groups, Mayor Michael R. Bloomberg of New York City and some New Jersey landlords, who contend that the programs are an expensive and ineffective form of assistance to wealthy corporations.

The critics pointed out that even when the promised jobs have not materialized, the Christie administration has merely reduced, not withdrawn, the subsidies. And they say that the administration is mortgaging the state’s future by forgiving so much tax revenue for the next 10 to 15 years.

“Christie has taken this to a whole different level; it’s become a feeding trough,” said Deborah Howlett, executive director of New Jersey Policy Perspectives, a liberal policy organization. “It seems ridiculous to steal jobs from one city in the state and move them to another city a couple miles away. There just doesn’t seem to be any benefit to taxpayers.”

Mr. Christie, who has portrayed himself as a fiscal conservative, has in particular used a new program, the Urban Transit Hub Tax Credit Program, for the subsidies. The program, which is intended to encourage development around nine cities, offers tax credits equal to 100 percent of some capital investments.

“This is another success story about one of our largest businesses choosing to stay in New Jersey, continue to grow and invest in our state and people,” Mr. Christie said at Panasonic’s groundbreaking in October. “This project directly benefits New Jerseyans by keeping over 800 jobs here, creating up to 200 new, permanent positions, and spurring private investment.”

Under the program, the Christie administration has granted more than $900 million in state tax credits over 10 years to 15 companies, including Panasonic, Goya, Prudential and Campbell’s Soup. The companies have promised to add 2,364 jobs, or $387,537 in tax credits per job, over the next decade.

The most controversial of those deals is also the largest.

The state approved up to $250 million in tax credits last year for Prudential, Newark’s most important corporate citizen, to build a new office tower. The company acknowledged that the jobs were not “at risk” of leaving the state and that renewing its leases at three buildings in the nearby Gateway complex were the “low-cost options by a wide margin when compared to the cost of new construction.”

The $250.8 million in tax credits, however, made the office tower project possible. In return, Prudential claimed it would create 400 new jobs, including 100 coming from outside New Jersey. The other new jobs were based on the company’s past growth patterns, which presumably would occur at either location.

The three landlords at Gateway filed a lawsuit in December to block the tax credits, arguing that the loss of Prudential, which leased a combined 922,000 square feet, would have a “devastating financial impact” on both Gateway and Newark, as the office vacancy rate shot up.

They contended that Prudential would have renewed its lease if not for the state’s intervention in the form of tax credits. The state’s decision, the landlords said, amounted to “corporate welfare at its worst.”

Panasonic received $102.4 million in tax credits to move its headquarters nine miles within New Jersey. Goya Foods picked up $81.9 million in credits to build offices and a warehouse in Jersey City, two miles from its current complex. Prudential Insurance obtained $250.8 million to move a few blocks to a new tower in Newark.

Prudential Insurance, now in the Gateway complex in Newark, will receive $250.8 million in tax breaks to move a few blocks.

Since taking office in 2010, Gov. Chris Christie has approved a record $1.57 billion in state tax breaks for dozens of New Jersey’s largest companies after they pledged to add jobs. Mr. Christie has emphasized that these are prudent measures intended to help heal the state’s economy, which lost more than 260,000 jobs in the recession. The companies often received the tax breaks after they threatened to move to New York or elsewhere.

The generous distribution of subsidies in New Jersey has come under fire from government-reform groups, Mayor Michael R. Bloomberg of New York City and some New Jersey landlords, who contend that the programs are an expensive and ineffective form of assistance to wealthy corporations.

The critics pointed out that even when the promised jobs have not materialized, the Christie administration has merely reduced, not withdrawn, the subsidies. And they say that the administration is mortgaging the state’s future by forgiving so much tax revenue for the next 10 to 15 years.

“Christie has taken this to a whole different level; it’s become a feeding trough,” said Deborah Howlett, executive director of New Jersey Policy Perspectives, a liberal policy organization. “It seems ridiculous to steal jobs from one city in the state and move them to another city a couple miles away. There just doesn’t seem to be any benefit to taxpayers.”

Mr. Christie, who has portrayed himself as a fiscal conservative, has in particular used a new program, the Urban Transit Hub Tax Credit Program, for the subsidies. The program, which is intended to encourage development around nine cities, offers tax credits equal to 100 percent of some capital investments.

“This is another success story about one of our largest businesses choosing to stay in New Jersey, continue to grow and invest in our state and people,” Mr. Christie said at Panasonic’s groundbreaking in October. “This project directly benefits New Jerseyans by keeping over 800 jobs here, creating up to 200 new, permanent positions, and spurring private investment.”

Under the program, the Christie administration has granted more than $900 million in state tax credits over 10 years to 15 companies, including Panasonic, Goya, Prudential and Campbell’s Soup. The companies have promised to add 2,364 jobs, or $387,537 in tax credits per job, over the next decade.

The most controversial of those deals is also the largest.

The state approved up to $250 million in tax credits last year for Prudential, Newark’s most important corporate citizen, to build a new office tower. The company acknowledged that the jobs were not “at risk” of leaving the state and that renewing its leases at three buildings in the nearby Gateway complex were the “low-cost options by a wide margin when compared to the cost of new construction.”

The $250.8 million in tax credits, however, made the office tower project possible. In return, Prudential claimed it would create 400 new jobs, including 100 coming from outside New Jersey. The other new jobs were based on the company’s past growth patterns, which presumably would occur at either location.

The three landlords at Gateway filed a lawsuit in December to block the tax credits, arguing that the loss of Prudential, which leased a combined 922,000 square feet, would have a “devastating financial impact” on both Gateway and Newark, as the office vacancy rate shot up.

They contended that Prudential would have renewed its lease if not for the state’s intervention in the form of tax credits. The state’s decision, the landlords said, amounted to “corporate welfare at its worst.”

Gov. Chris Christie of New Jersey exaggerated when he declared that unforeseen costs to the state were forcing him to cancel the new train tunnel planned to relieve congested routes across the Hudson River, according to a long-awaited report by independent Congressional investigators.
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Gov. Chris Christie said he canceled a project because of cost overruns
The report by the Government Accountability Office, to be released this week, found that while Mr. Christie said that state transportation officials had revised cost estimates for the tunnel to at least $11 billion and potentially more than $14 billion, the range of estimates had in fact remained unchanged in the two years before he announced in 2010 that he was shutting down the project. And state transportation officials, the report says, had said the cost would be no more than $10 billion.

Mr. Christie also misstated New Jersey’s share of the costs: he said the state would pay 70 percent of the project; the report found that New Jersey was paying 14.4 percent. And while the governor said that an agreement with the federal government would require the state to pay all cost overruns, the report found that there was no final agreement, and that the federal government had made several offers to share those costs.

Canceling the tunnel, then the largest public works project in the nation, helped shape Mr. Christie’s profile as a rising Republican star, an enforcer of fiscal discipline in a country drunk on debt. But the report is likely to revive criticism that his decision, which he said was about “hard choices” in tough economic times, was more about avoiding the need to raise the state’s gasoline tax, which would have violated a campaign promise. The governor subsequently steered $4 billion earmarked for the tunnel to the state’s near-bankrupt transportation trust fund, traditionally financed by the gasoline tax.

A spokesman for the governor, Michael Drewniak, said Mr. Christie’s statement of costs had included $775 million to build a new portal bridge, which was required as part of the project. The 70 percent, he said, included the costs that would have been paid for by the Port Authority of New York and New Jersey, which is run by both states, as well as federal highway and stimulus funds earmarked for New Jersey. Counting those costs, which the report does not do, would put the state’s share at 65.5 percent.

As for the state’s share of the overruns, Mr. Drewniak said the federal government “offered no significant increase in outright funding that would significantly mitigate the costs to New Jersey.”

“The bottom line is that the G.A.O. report simply bears out what we said in the fall of 2010 and say to this day: the ARC project was a very, very bad deal for New Jersey,” he added, using the acronym for the project, known as Access to the Region’s Core.

Martin E. Robins, the founding director of the Alan M. Voorhees Transportation Center at Rutgers University and an early director of the ARC project, criticized the governor. “In hindsight, it’s apparent that he had a highly important political objective: to cannibalize the project so he could find an alternate way of keeping the transportation trust fund program moving, and he went ahead and did it,” he said.

Shutting down the tunnel project extinguished the best hope to relieve the increasing congestion not only between New Jersey and Manhattan, but also along the popular high-speed route between Boston and Washington. Now, Amtrak and New Jersey trains share two 100-year-old single-track tunnels under the Hudson. As the report notes, those tracks now operate at capacity, and demand for mass transit between New Jersey and Manhattan is expected to grow 38 percent by 2030.

One 15-minute disruption, the report said, ripples out to affect 15 other Amtrak and New Jersey trains. Last month, problems on the two tracks on two consecutive days sent delays rippling out along the Northeast.

The governor said when he canceled the project that he hoped New York City or federal officials would find another solution But last week, the chairman of the Metropolitan Transportation Authority said one of those, a proposed extension of the No. 7 subway line to New Jersey, was not going to happen “in anybody’s lifetime.” Congress gave Amtrak $15 million to study a tunnel that would expand capacity by about half as much as the ARC project, but the money to build the tunnel is uncertain.